FBC adds venture capital to its portfolio, PAT nearly doubles

FBC Holdings Limited has established a venture capital business to invest in start-ups as the institution seeks to diversify revenue streams.

The company nearly doubled its profit-after-tax to US$44,43 million last year from a 2017 comparative of US$23,24m.

Chief executive John Mushayavanhu told NewsDay on the sidelines of an analysts briefing that the FBC group was currently assessing proposals and applications.

“We realised there was a missing link in terms of the capital requirements in terms of SMEs (small-to-medium enterprises) because the tendency is for people to think that when an SME starts a business they need loans. But, some of them need patient capital where you need money as equity over a period of time for the business to take off …,” he said.

“… and then when the business has taken off you are getting your money through profits, dividends and fees. After that, you can either divest through listing that company on the stock exchange or selling your equity so that is what we want to do.”

He, however, was unable to say how much FBC Holdings had set aside for the new venture only stating that “this would be determined by demand”.

The new business unit will become the seventh segment to the FBC group which already has a bank, building society, microfinance, securities, reinsurance and insurance businesses.

Said Mushayavanhu: “The profits were driven mostly by fee income and also by an improved loan book. In other words, we did not have that many non-performing loans and recoveries from previously written bad debts.”

Basic earnings per share amounted to 6,95 cents from 3,62 cents in 2017.

Income from fees and commission was up 35,41% to US$42,8m from US$31,6m in the previous year.

Net interest and related income grew 41,52% to US$65,19m on the back of a 35% increase in loans and advances to US$405,5m.

The segment was driven by mortgaging with the group indicating that it would be targeting the diaspora market for foreign currency.

Total operating expenses were up 28% during the period under review to US$73,3m driven by administrative and staff costs which were up by 51% and 21%, respectively.

In terms of liquidity, the FBC group recorded US$192,2m in cash and cash equivalents, an increase for the 2018 period from a 2017 comparative of US$181m.

Going forward, Mushayavanhu said the group will be looking to increase its holding of Treasury Bills (TBs) that was up about 65% to US$186,06m from US$112,87m in 2017.

“It’s because we have got quite a significant portion of our TBs maturing before the end of June and obviously from a compliance point of view you also need to have Treasury Bills as prescribed assets so we would need to increase these. The government has always paid and has never defaulted,” he said.

FBC Holdings is capitalised to the tune of US$178,7m, while its assets grew from US$712,43m to US$1,11 billion.